EU warned over Brexit ‘land-grab’ on City
Trump adviser says France and Germany will put global economy at risk with ‘forced relocation’
GERMANY and France will put the stability of the global economy at risk if it mounts a Brexit land-grab on the City of London, one of Donald Trump’s most senior economic officials has warned. Christopher Giancarlo, chairman of the Commodity Futures Trading Commission, said the “forced relocation” of parts of the City to Europe would pose “significant costs”.
Brussels is threatening a massive raid on the City by demanding “clearing houses” for the euro’s move to the continent.
Clearing houses stand between two sides of a trade to ensure its smooth completion, and also set aside funds to protect investors when a trade defaults.
Mr Giancarlo told The Daily Telegraph: “Any forced relocation... to one or more EC member states has the potential to impose significant costs on the global economy, not just Europe, and fragment financial markets to the detriment of systemic resiliency worldwide.”
It came after Xavier Rolet, the chief executive of the London Stock Group, warned France and Germany that they risk triggering a financial crisis if they try to dismantle the London-based heart of the global economy. Writing in The Daily Telegraph yesterday, he said that EU leaders who demanded tighter global financial regulation in the wake of the financial crisis are threatening to “fragment” those same standards as a punishment for Brexit.
In a speech yesterday he added that a land-grab for the City would be “protectionist”. He said: “European location policy would fragment global markets increasing risks significantly. It is in our view a political device.
“Only enhanced regulatory cooperation can protect the taxpayers, enhance financial stability and growth, given the global nature of the vast majority of financial transactions. We must build on, not unpick the global standards designed to protect and grow our economy.” His calls came as Britain’s banks warned that any attempt by France and Germany to grab a slice of the City ahead of Brexit could backfire.
Stephen Jones, chief executive of UK Finance, Britain’s main banking industry body, told a Lords select committee: “We detect some degree of political will in certain parts of continental Europe in order to reclaim what they perceive to be 20 years loss of wholesale financial services to the London market.” He added that breaking up markets could increase costs significantly for consumers and companies on the continent. “It’s a very short-sighted approach to negotiations, but I recognise that in certain markets it’s the political reality,” he said.
Peers were told there must not be a “bonfire of regulations” after Brexit. Mark Hoban, chairman of the International Regulatory Strategy Group, a think tank backed by the City of London, said: “My concern would be… that if this Bill [the EU Withdrawal Bill] is used as an opportunity to unpick regulation, that would be to the detriment of that stability and certainty.”